Warren Buffet |US Stocks, US Equities | Investment Banks

By Staff Editor | June 7, 2024

Watching Warren
Omaha-based investment guru Warren Buffet recently made a rare public proclamation.
In a New York Times editorial, he encouraged others to follow his suit and buy up US equities,
in the belief that the current panic has depressed their values far beyond fundamentally justifiable levels.

He revealed that he himself now has nearly 100% of his personal fortune invested in US stocks.
He admonished his readers to remember to be ‘fearful when others are greedy, and greedy when others are fearful’.

This seems like sound counsel, and fairly intuitive to committed contrarian investors.
But what Buffet didn’t emphasize in his editorial is the specific identity of the stocks he has recently picked.
Notably, he recently invested in two major banking powerhouses, Goldman Sachs and Wells Fargo. On reflection this investment is easy to understand.

Even as the public is disturbed and distracted by news of the falls of such titans as Bear Stearns and Lehman Brothers,that news has a silver lining. The field of investment banking, even as it narrows, will not disappear.
The fall of irresponsible brokerage houses means more opportunity and profits for their more prudent competitors who have weathered the crisis.

To put it differently, America will always have to bank somewhere, and it now appears that the somewhere will be with Wells Fargo and Goldman Sachs.

If shares of these banks are now depressed, it is only a result of irrational panic and fear.
This creates a rare opportunity to buy up shares at an artificially discounted price.
In short, for those who can get a grip and suppress the instinct to flee for cover,
now is an excellent time to follow Buffet’s example and load up on shares those investment banks
that appear poised to swallow up the market share left on the table when others failed.

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